OREANDA-NEWS. Fitch Ratings has downgraded LCR Finance Plc's (LCRF) notes, as follows:

GBP1,225m senior unsecured notes due 2028: downgraded to 'AA' from 'AA+', Outlook Negative

GBP425m senior unsecured notes due 2038: downgraded to 'AA' from 'AA+', Outlook Negative

GBP1,100m senior unsecured notes due 2051: downgraded to 'AA' from 'AA+', Outlook Negative

The rating actions follow the downgrade of the UK sovereign credit rating (see 'Fitch Downgrades the United Kingdom to 'AA'; Outlook Negative' dated 27 June 2016 at www. fitchratings. com).

LCRF is the financing vehicle for London and Continental Railways (LCR), which was selected in 1996 as the winning consortium to construct the Channel Tunnel Rail Link (CTRL) under a private finance initiative agreement. LCRF's unsecured bonds are irrevocably and unconditionally guaranteed by the UK government (HMG; AA/Negative/F1+).

KEY RATING DRIVERS

The downgrade reflects the downgrade of the guarantor and funder, HMG. As the ratings of LCRF's notes rely on HMG and, as such, are credit-linked to the UK sovereign rating, Fitch considers that the only risk factor applicable to the ratings is external support, which was assessed as Stronger.

RATING SENSITIVITIES

Given that HMG irrevocably and unconditionally funds and guarantees the full discharge of LCRF's debt service commitments, any further change in HMG's rating would lead to a corresponding change in the notes' ratings.

SUMMARY OF CREDIT

Section 1 of the CTRL railway opened in September 2003 and section 2 to the newly-restored St Pancras Station opened in November 2007. The company was restructured and transferred to the Department for Transport in mid-2009. In 2010, HMG sold a 30-year concession to operate the entire CTRL (now known as High Speed 1) to a private consortium consisting of Ontario Teachers' Pension Plan and Borealis Infrastructure.